Re­search shows that peo­ple in China are now more fo­cused on spend­ing on things to im­prove their well-be­ing and fam­ily ties

Chi­nese con­sumers are seek­ing a more bal­anced life where health, fam­ily and ex­pe­ri­ences are the top pri­or­i­ties, ac­cord­ing to McKin­sey’s 2016 China Con­sumer Re­port.

The re­port re­vealed that Chi­nese con­sumers are now set­ting aside a larger por­tion of their in­come for life­style ser­vices and ex­pe­ri­ences — more than half of the in­ter­vie­wees plan to spend more on leisure and en­ter­tain­ment, as ev­i­denced by a 50 per­cent surge in box-of­fice re­ceipts in the past year.

At the same time, an in­creas­ing num­ber of con­sumers are striv­ing to achieve more bal­anced lives by eat­ing health­ier food, prac­tic­ing pre­ven­tive health­care and pur­su­ing sport­ing ac­tiv­i­ties.

The re­port, which sur­veyed 10,000 peo­ple aged 18 to 56 across 44 cities in China, also re­vealed that the days of broad-based mar­ket growth are com­ing to an end.

Al­though China is the world’s largest e-com­merce mar­ket — gen­er­at­ing rev­enues of about 4 tril­lion yuan ($620 bil­lion) last year, nearly the same as Europe and the United States — phys­i­cal the amount of rev­enue China's

Fur­ther­more, con­sumer sat­is­fac­tion with phys­i­cal stores re­mains higher than on­line ones. How­ever, the gap is nar­row­ing, es­pe­cially as sat­is­fac­tion with hy­per­mar­kets de­clines, ac­cord­ing to the re­port.

“Al­though on­line shop­ping is more con­ve­nient and ac­ces­si­ble, it is still more re­li­able to pur­chase cer­tain es­sen­tials like out­er­wear, food and large fur­ni­ture in phys­i­cal stores as we can then be sure of the qual­ity of the prod­uct,” said Zhu Minzi, a house­wife in Shang­hai.

The re­port also showed that one trend that is help­ing main­tain in­ter­est in phys­i­cal stores is “re­tail­tain­ment”. Twothirds of Chi­nese con­sumers say that shop­ping is the best way to spend time with their fam­i­lies, an in­crease of 21 per­cent from three years ago.

“Malls com­bine shop­ping, din­ing and en­ter­tain­ment op­tions, and they of­fer the en­tire fam­ily a place to en­joy them­selves,” said Gong Fang, part­ner in McKin­sey’s Shang­hai of­fice.

The re­port added that con­sumers in China look to strengthen fam­ily ties through travel, with 74 per­cent of re­spon­dents say­ing that travel helps them to bet­ter con­nect with fam­ily mem­bers. About 45 per­cent of in­ter­na­tional trips were taken with fam­ily mem­bers in 2015, com­pared to 39 per­cent in 2012.

More than 70 mil­lion Chi­nese cit­i­zens trav­eled overseas in 2015, mak­ing 1.5 trips per per­son on av­er­age, and shop­ping has been founded to be an in­te­gral part of this ex­pe­ri­ence.

“Hav­ing a happy fam­ily de­fines suc­cess for Chi­nese con­sumers, so the im­por­tance of the fam­ily has grown steadily over the last few years,” said Daniel Zipser, part­ner in McKin­sey’s Shang­hai Of­fice and Leader of the Con­sumer & Re­tail Prac­tice in Greater China.

In ad­di­tion, the re­port found that Chi­nese con­sumers are also in­creas­ingly switch­ing from spend­ing on mass prod­ucts to premium al­ter­na­tives — 50 per­cent of re­spon­dents now seek the best and most ex­pen­sive prod­uct avail­able, a sig­nif­i­cant in­crease from pre­vi­ous years.

A ris­ing pro­por­tion of Chi­nese con­sumers now fo­cus on just a few brands while some have de­vel­oped loy­al­ties to a par­tic­u­lar la­bel. The num­ber of con­sumers will­ing to switch to a brand out­side their “short list” has also dropped sharply. For in­stance, in the ap­parel seg­ment, the num­ber of con­sumers will­ing to con­sider a brand they hadn’t be­fore dropped from about 40 per­cent in 2012 to be­low 30 per­cent in 2015.

“Un­der­stand­ing and re­spond­ing to changes in spend­ing habits will be de­ci­sive in de­ter­min­ing the com­pa­nies that win or lose, whether in­ter­na­tional or do­mes­tic com­peti­tors,” said Gong.